Proposed Increase in Wage Ceiling for EPF Coverage to ₹25,000: Implications for Employees and Employers

The Ministry of Finance has increased its approved wage ceiling for mandatory retirement fund coverage to ₹25,000 per month, from the current ₹15,000 limit, according to a Moneycontrol report citing sources.

The source added that this limit has stayed unchanged since it was last revised in September 2014 — almost 12 years back. They added that the new limit aims to expand the Employee Provident Fund Organisation’s PF and pension coverage to more salaried workers, as per the report.

Date of implementation will be decided once the Union Cabinet approves the decision, it added.

Taxconcept could not independently verify the report and official confirmation on the same is still awaited.

What is the proposed wage ceiling hike?

At present, employees earning up to ₹15,000 of basic pay per month are covered under the employees’ provident fund (EPF) and employees’ pension scheme (EPS). If implemented, raising this limit to ₹25,000 would bring more companies under compliance norms.

According to the government source, the initial proposal was for ₹30,000, which has been finalised at ₹25,000 to be put before the Cabinet for approval, the MC report added.

What could change for employees, employers, govt?

EPF and EPS enrolment for employees with up to ₹15,000 basic pay is compulsory in companies with at least 20 or more total staff. However, those earnings more can opt out of the schemes.

• With the cap being hiked, more employees, earning up to ₹25,000 will now be brought under compliance — expanding social security coverage for private sector workers, the report noted.
• For employers on the other hand, payroll costs are set to increase, as they will be mandated to contribute to more employees’ PF accounts. They contribute 8.33% of basic pay per employee.

• The government is also set to see its contribution increase — it is mandated to contribute 1.16 percent of basic pay toward the pension fund. For FY27, EPS has received Budget allocation of over ₹11,000 crore.

Expectations are that once the Cabinet clears the proposal, implementation could come as soon as the next financial year, i.e. 1 April 2027.

Notably, under the EPF Scheme 2026, mandatory PF contribution is linked to the statutory wage ceiling of ₹15,000 per month. Thus, calculating for 12% of ₹15,000, your employer is mandated to contribute minimum of ₹1,800 per month towards EPF. Contribution above this amount can be done but is voluntary.